- Connecticut Department of Labor issues annual report on economic indexes in each of the state’s 169 cities and towns
- The number of business establishments in Connecticut grew in 2020 despite the COVID-19 pandemic, but jobs growth in the state has been lagging
- Southeastern Connecticut towns and cities suffered the worst declines in their economic indexes during the pandemic
Summary by Dirk Langeveld
No city or town in Connecticut escaped a blow to its economic indexes due to the COVID-19 pandemic, according to recent data from the Connecticut Department of Labor. While the number of businesses in the state actually grew between 2019 and 2020, the state has lagged in job creation both in near-term and long-term trends.
The Connecticut Town Economic Indexes were introduced in 2015 and have been updated on an annual basis since then. The indexes are calculated based on each municipality’s number of business establishments, employment, inflation-adjusted annual wages, and unemployment rate.The first three factors are used to gauge a municipality’s business activities and overall economic strength, while the unemployment rate is used to assess the economic health of its residents.
Between 2019 and 2020, the number of business establishments in Connecticut grew by 1.9 percent to 125,313 – more than twice the 0.7 percent annual growth rate in 2019. The state has also seen its business establishments grow by 12.6 percent since 2010. Stamford remains Connecticut’s major business hub, with 6,302 companies located here in 2020.
Seventy-two percent of Connecticut’s municipalities added businesses between 2019 and 2020. Ninety-two percent have seen their business tally grow since 2010.
The economic effects of the COVID-19 pandemic led to a severe drop in employment in Connecticut in 2020, with average statewide employment falling 7.5 percent. Only 5 percent of municipalities saw job recovery during the year, while just 44 percent saw employment growth between 2010 and 2020.
Ninety-seven percent of municipalities saw inflation-adjusted wage gains between 2019 and 2020, up from 61 percent in 2019. The average Connecticut worker in 2020 earned $61,328, a 6.2 percent increase from 2019 and a 3.1 percent increase from 2010.
The indexes use 2010 as the base year, with CTEI of 100 indicating economic conditions equivalent to those in 2010. The Department of Labor notes how Connecticut’s economic recovery from the Great Recession began in 2011, although economic indexes improved at a slower pace from 2016 to 2017 and again in 2019.
Most municipalities have seen economic improvement since 2010. All but eight towns or cities (Ledyard, Montville, New London, Norwich, Preston, Sprague, Southbury, and Trumbull) experienced growth in their economic index between 2010 and 2020.
Southeastern Connecticut experienced some of the worst economic fallout of the pandemic, with Ledyard and Montville showing the worst downturn in their economic indexes among municipalities with fewer than 25,000 people. Norwich and New London saw the worst decline for towns and cities of 25,000 to 100,000, with Norwich’s unemployment rate rising from 3.9 percent in 2019 to 14 percent in 2020 – the highest in the state.
Statewide, the unemployment rate grew from 3.6 percent in 2019 to 7.9 percent in 2020. The Connecticut DOL’s latest data shows that it has fallen to 7.3 percent.